Welcome to the ODAC Newsletter, a weekly roundup from the Oil Depletion Analysis Centre, the UK registered charity dedicated to raising awareness of peak oil.
For the oil industry this was CERAweek. As might be expected the conference was an occasion for considerable optimism about energy breakthroughs and successes especially in unconventional production. Behind the self-promotion there were nonetheless some notes of alarm in the air. At the conference the most obvious word of caution came from Total’s Yves-Louis Darricarrere. He said that it “will be difficult to produce more than 95 to 97 million barrels per day in the foreseeable future” that is liquids excluding biofuels (the IEA estimates oil demand excluding biofuels at 99mb/d by 2035). He went on to say that even this will mean that “25 to 45 million bpd will need to be supplied from fields that are not online today” or 2 to 4 Saudi Arabia production equivalents. Total is thus still the only major to be giving realistic outlooks.
So how do things look for finding all of this extra production? On the upside Iraq announced this week that it had produced more than 3 million bpd for the first time in 30 years — a major landmark. Much is hoped for in Iraq, the IEA has estimated that it could produce at 8 million bpd by 2030, while acknowledging that there are many challenges. Political and geopolitical challenges are of course not confined to Iraq — see news of the declaration of autonomy in the oil rich region of Cyrenaica, Libya, along with a report from risk analysts Maplecroft on resource nationalism.
And what of Saudi Arabia on which so much hope continues to rest? Brad Bourland, Chief Economist for the Jadwa Investment Company struck a warning note on a CERAweek panel with regard to the growing pressure caused by rising domestic oil demand in the Kingdom. On current trends he said that “By 2030, Saudi Arabia would require a break-even price for oil of about $320 per barrel to balance its budget”. This was especially interesting in view of a warning on Tuesday from Saudi oil minister Ali Al Naimi that “In light of such unpredictable fluctuations (in the oil market)…we should depend on oil revenues, products and various usages to create other sources of economic growth and prosperity” — this from a man for whom $28/barrel was a fair price for the future in 2004.
Exxon Mobil also rather spoiled the party by announcing that it expects a drop in production in 2012 followed by modest growth in the coming years. Exxon’s investment plans are in line with what the IEA believes is required to increase production, but this is expensive oil and by no means assured. CEO Rex Tillerson also told analysts that new methods and tools will need to be invented to tap many of the shale fields in Europe and China saying that “Some of the shales don’t respond as well to hydraulic fracturing“. According to Tillerson “An unprecedented level of investment will be needed to develop new energy technologies to expand supply of traditional fuels and advance new energy sources”.
Another key event this week is the one year anniversary of the Japanese tsunami, and the Fukushima nuclear disaster. The plant itself is now in cold shutdown, though permanent retirement is a long way off and holds many uncertainties. The after effect of the disaster on nuclear power has been most pronounced in Germany where the government reversed its policy and now plans to exit from nuclear by 2022 — Belgium and Switzerland also announced plans to move away from the technology. This aside, it looks like nuclear took a real hit in the 2011-12 period—according to The Guardian only 2 new builds began in that time compared to 38 during 2008-2010. The drop is however unlikely to be indicative of the future with 50 countries either continuing to operate plants or planning to construct them. A report in Nature Journal this week by Professor Peter Bradford argues that it is the cost of nuclear which is likely to be the greatest barrier to further adoption.
View our Reports and Resources page
Oil
CERAWEEK: Total’s Upstream Chief Says Peak Oil Is Around The Corner
For the past couple of years executives from French oil giant Total have espoused a belief that the world is pretty close to a peak in oil supply. Today in a speech at the CERAWeek energy conference in Houston, Yves-Louis Darricarrere, president of the company’s oil and gas exploration division, said, “We think it will be difficult to produce more than 95 to 97 million barrels per day in the foreseeable future.”
This volume of oil is not far away from the 91 million bpd or so expected by the International Energy Agency this year. Getting to 97 million bpd would entail supply growth of just 600,000 bpd a year for 12 years — that’s about what China’s demand growth has averaged in recent years…
Plateau Oil meets 125m Chinese cars
Oil spikes usually metastasize once energy costs reach 9pc of global GDP. The longer they stay there, the greater the damage.
That proved to be the pain barrier in the 1970s and again in 2008, and we are just shy of that level right now. “Oil is already capturing a higher level of European GDP than in 2008,” said Francisco Blanch from Bank of America…
CERA panel on Middle East touches on challenges for Saudi Arabia and Iran
Growing domestic energy demand could put Saudi Arabia in a bind by 2030, caused largely by oil subsidies, an expert told an audience during IHS CERA Week in Houston on Tuesday.
“A lot of this is being driven in the region by the sharp growth in domestic consumption of oil,” Brad Bourland, chief economist for the Jadwa Investment Company, of Saudi Arabia, said during a panel discussion on the Middle East…
Oil Producers See Untapped, Unconventional Fields Meeting Demand
Total SA (FP) and Petroleos Mexicanos executives said still-untapped global fields and new methods for extracting fuel from shale rock and deep water will help meet demand for oil and natural gas.
Undeveloped fields will produce 1 million barrels a day of oil by 2025, Yves-Louis Darricarrere, president of exploration and production for Paris-based Total, said yesterday on the first of five days of CERAWeek, an annual conference in Houston held by IHS Cambridge Energy Research Associates…
Dependency on oil income not suitable
Saudi Minister of Petroleum and Mineral Resources Ali Al-Naimi said Tuesday that depending on oil production and exports as a basis for national income and sustainable economic development isn’t appropriate, and said that oil revenues should be used to create other sources of economic growth.
“One of the toughest and most important local challenges is the continuous dependence on oil for government revenues and for the national economy’s components as a whole,” Naimi said in a speech in Jubail…
Iran is far from the only threat to oil prices
Iran’s recent move to accept gold as payment for its oil instead of dollars underlined its uncompromising response to international sanctions, stoking concerns around supply from the oil-rich state.As holder of the world’s third-largest oil reserves, Iran is naturally the focus of worries about the dangers politicians pose to global energy chains, with no end in sight to the row over its push to develop nuclear power.
Still, better get used to biting your nails is the message from a new report, which argues that similar threats to global energy prices are widespread.
Close to half (44pc) of global oil production is taking place in countries with a high risk of resource nationalism, according to risk analysts Maplecroft…
Playing With Fire
Scientists base their conclusions on facts and well-documented observations and experiments, while historians can turn the pages of past records even if they cannot always penetrate the hidden motives of the powers behind the throne. But no one can forecast the future with confidence, and even evaluating the current political climate is assailed by many uncertainties. The mainstream media are under the control of a few enterprises having vested interests on what they report and how they present it. The Internet has opened new doors providing a wealth of insight but again it is difficult to be sure of the validity of what is revealed.
This brief paper will take a look at the unfolding situation, but can only speculate on many of the facets…
Nigerian Delta Unrest Cuts Oil Output by 1 Million Barrels
Oil production in Nigeria, Africa’s biggest producer, is down by about 1 million barrels a day because of violence and theft in the Niger River delta, according to the state oil company.
Output is yet to be restored at 40 onshore oil fields mostly operated by Hague-based Royal Dutch Shell Plc (RDSA), San Ramon, California-based Chevron Corp. (CVX) and smaller producers more than two years after a government amnesty led to the disarming of thousands of militants and a decline in attacks on oil companies, according to data obtained from the Nigerian National Petroleum Corp…
Libya’s oil-rich east declares autonomy
Exxon Mobil sees dip in 2012 oil, gas output
Exxon Mobil Corp expects its 2012 oil and natural gas output to drop 3 percent from 2011 levels, although production volumes should grow by an average of 1 to 2 percent annually through 2016.
In a slide presentation for its annual analysts’ meeting, the company said its production of liquids would grow by 2 to 3 percent on average through 2016, while its gas output would rise by 0.5 to 1.0 percent…
BP Deal Opens a New Phase, but Case Is Far From Closed
Now it gets complicated.
The late-night announcement on Friday of a proposed $7.8 billion deal in the BP civil trial is not the end of the case, but the beginning of a new phase with many unanswered questions…
Oil up as Greece hopes, US jobs data fuel rebound
Crude oil rose on Wednesday, rebounding from a sharp decline as hopes that Greece’s debt restructuring will go through lifted the euro against the dollar, creating better bargains for oil buyers and fanning interest in riskier trades.
Also helping oil recover from the previous day’s sharp drop was data showing an accelerated pace of job creation in the U.S. private sector in February, raising optimism about Friday’s government employment report for that month…
Gas
Exxon in spotlight after Papua New Guinea landslide
A deadly landslide in the mountains of Papua New Guinea, near where Exxon Mobil is building a $15.7bn gas project, has raised new questions about the global energy industry’s scramble for ever harder-to-reach resources.
The landslide tore through a quarry used by Exxon in January, killing at least 25 people in the poor South Pacific country, but it has stirred little international publicity, even though an expert report had questioned the safety of the excavations…
Fracking Failing to Crack China, Europe Shale, Exxon Says
Some shale formations in Europe and China are impervious to drilling techniques that opened vast reserves of natural gas and oil from Texas to Pennsylvania, said Rex Tillerson, Exxon Mobil Corp. (XOM)’s chief executive officer.
New methods and tools will need to be invented to tap many of the shale fields that energy companies and governments expect eventually to yield a bonanza of fuel, Tillerson said during a meeting with analysts in New York today…
Nuclear
Dramatic fall in new nuclear power stations after Fukushima
The number of new nuclear power stations entering the construction phase fell dramatically last year compared with previous years, in the aftermath of the incident at the Fukushima nuclear plant in Japan last March.
From 2008 to 2010, construction work began on 38 reactors around the world, but in 2011-12, there were only two construction starts, according to Steve Thomas, professor of energy studies at the University of Greenwich…
World nuclear powers on after Fukushima, costs rise
A year after the Fukushima nuclear accident most of the world continues running and building nuclear power, but extra risk control measures imposed in the wake of the disaster will increase the cost of operating nuclear plants.
Japan’s reactor meltdowns at the Fukushima nuclear plant triggered by a deadly earthquake and tsunami on March 11 last year shook the nuclear world and raised a question mark over whether atomic energy is safe…
Why taxpayers serve nuclear power and not the other way around
A year on from Fukushima’s meltdown, an extraordinarily clear-eyed analysis from an industry veteran rails against the ‘prophecies’ made by all sides of the debate.
“It would be ideal if Fukushima could steer us away from prophecies and towards a sensible assessment of market economics, climate science and nuclear risks. Then nuclear power would serve the public, not the other way around. I don’t know how many reactors we would get, but we would get the number that we need.”…
UK nuclear sites at risk of flooding, report shows
As many as 12 of Britain’s 19 civil nuclear sites are at risk of flooding and coastal erosion because of climate change, according to an unpublished government analysis obtained by the Guardian.
Nine of the sites have been assessed by the Department for Environment, Food and Rural Affairs (Defra) as being vulnerable now, while others are in danger from rising sea levels and storms in the future…
Renewables
Energy storage: Packing some power
SUMMER in Texas last year was the hottest on record. Demand for power spiked as air conditioners hummed across the state. The Electric Reliability Council of Texas (ERCOT), the state grid operator, only narrowly avoided having to impose rolling blackouts. To do so, it had to buy all the electricity it could find on the spot market, in some cases paying an eye-watering 30 times the normal price.
On paper at least, ERCOT ought to have had plenty of power. In 2010 it reported 84,400 megawatts (MW) of total generation capacity, well over last summer’s peak demand of 68,294MW. In theory, this is enough to produce some 740 billion kilowatt hours (kWh) of electricity a year—more than double the 319 billion kWh that ERCOT’s customers actually demanded during 2010. In electricity generation, however, aggregates and averages carry little weight. One problem is that wind energy accounted for 9,500MW of ERCOT’s total capacity, and the wind does not blow all the time. It tends to be strongest at night, when demand is low. Moreover, power firms are required by regulators to maintain a safety margin over total estimated demand—of 13.75%, in ERCOT’s case—in order to ensure reliable supply…
‘Germans Are Willing to Pay’ for Renewable Energies
In a SPIEGEL interview, German Environment Minister Norbert Röttgen, 46, discusses the nuclear phase-out, controversial solar power subsidies and why he believes Chancellor Angela Merkel’s energy revolution — which will see the country move to clean energies — is still on track.
SPIEGEL: Minister Röttgen, it’s been a year since the nuclear accident at Fukushima. Do you still want to phase out nuclear energy?…
Biofuels
Sun, sewage and algae: a recipe for success?
There’s not much that’s more renewable than sewage. So the idea of turning human waste into algae and then into biofuel is an attractive one and is now going to be put to the test on a commercial scale in southern Spain.
The €12m project will see the sunny skies of Cadiz beaming down on open ponds in which algae suck up the nutrients from the waste water. If all goes to plan over the next five years, the plant will produce about three tonnes of algae a day from 10 hectares of ponds, enough to run about 200 vehicles…
UK
Cable: put offshore wind “success story” at heart of UK industrial policy
Offshore wind is one of the British industrial success stories business secretary Vince Cable has urged the government to get behind as part of creating “a compelling vision of where the country is heading”.
In a widely leaked letter (PDF) addressed to David Cameron and Nick Clegg, Cable laments “piecemeal” policy and a failure to show sufficient leadership in identifying and supporting key technologies…
Cable says green tax must be cut to save companies
Vince Cable is pushing Chancellor George Osborne to scrap a £740m environmental burden on British business in this month’s budget. It is understood that business department officials have asked the Treasury to remove the carbon reduction commitment (CRC).
This forces an estimated 20,000 non-energy intensive businesses that still use lots of electricity and have bills of around £500,000, such as supermarket and hotel chains, to pay a price for every ton of carbon they emit…
Scottish finance report sparks row over North Sea oil and independence
A vigorous dispute has broken out over Scottish independence after a report claimed that North Sea oil would have made Scotland better off than the rest of the UK last year.
The Scottish government’s annual analysis of spending and revenue showed that Scotland had a smaller deficit proportionally than the rest of the UK in 2010-11, but only if its full geographical share of North Sea oil revenues, worth nearly £8.8bn last year, was included…
Wadebridge, the UK’s first solar-powered town – video
Wadebridge in Cornwall aims to become the first town in the country to run significantly on renewable energy sources. This film documents a local activist group’s efforts to convince the rest of the community that solar panels and wind turbines are the way forward
Controversial renewable energy report branded ‘shoddy nonsense’
The government and renewable energy businesses have slammed the findings of a controversial report that claimed 2020 carbon reduction targets could be achieved more cost effectively by building nuclear and gas-fired power stations instead of wind farms.
The report, Powerful Targets, launched yesterday by independent consultancy AF Consult, was based on a study originally developed with consultancy KPMG last year, which formed the basis of a number of media reports attacking the cost of renewable energy…
